QUESTION 2 At a board meeting on 1 April 2019, Pulsars directors made the decision to close down one of its factories on 31 December 2019. The factory and its related plant would then be sold. A formal plan was formulated and the factorys 250 employees were given three months notice of redundancy on 1 October 2019. Customers and suppliers were also informed of the closure at this date. The directors of Pulsar have provided the following information: Fifty of the employees would be retrained and deployed to other subsidiaries within the group at a cost of K125,000; the remainder will accept redundancy and be paid an average of K5,000 each. Factory plant has a carrying amount of K2.2 million, but is only expected to sell for K500,000 incurring K50,000 of selling costs; however, the factory itself is expected to sell for a profit of K1.2 million. The company rents a number of machines under operating leases which have an average of three years to run after 31 December 2019. The present value of these future lease payments (rentals) at 31 December 2019 was K1 million; however, the lessor has said they will accept K850,000 which would be due for payment on 31 January 2019 for their cancellation as at 31 December 2019. Penalty payments due to non-completion of supply contracts are estimated at K200,000. Required: Explain and quantify how the closure of the factory should be treated in Pulsars financial statements for the year ended 31 December 2019. Note: The closure of the factory does not meet the criteria of a discontinued operation. (15 marks)